Congratulations on landing your first job! While your first instinct might be to spend your first paycheck on clothes, a new tattoo or even a holiday, it’s important to manage your money wisely. It’s a sad fact of life that there are always bills to be paid. The last thing you want is a bad credit history. But if you save and invest your money wisely during your first job, you will set yourself up for a successful future.
1. Create a budget
Now that you have landed your first job, it’s important you spend your paychecks wisely. You don’t want to get yourself in financial trouble, so keeping on top of your expenses is vital. The best way of doing this is by creating a budget to monitor your incoming and outgoing expenses, such as phone bills, utilities, rent and groceries. A budget will save you a lot of stress, as you will always be prepared for future expenses. A budget will let you know what ‘leftover’ money you have to spend on the fun stuff, like cinema tickets and new shoes.
2. Set financial goals
Figure out what your short-term and long-term financial goals are. This way, you can manage your budget around them. For example, do you have any holidays planned? Do you need a new car? Are you planning on moving place? Once you have your goals, you can figure out exactly how much you need to save and go from there.
3. Start a retirement savings plan
Check whether your company offers a retirement plan, because now that you have a steady income, it’s a good idea to start saving for the future. You never know what’s going to happen down the line, so it’s good to start saving while you can. If your company doesn’t offer a retirement plan, consider opening an individual account.
4. Be thrifty with your money
If you want to save as much money as you can, you need to be thrifty. There are many ways of doing this. You can eat out less, instead opting to prepare meals at home. If you want to be even more money savvy, you can cheap bulk foods and do meal prepping. Another way to save money is buying second-hand items, such as tech, furniture and clothes. You can also sell your own things, such as old phones and laptops for parts. You might only earn a bit of extra cash, but a little bit goes a long way.
5. Decide if you want to start investing
Investing money is completely different to saving money. Investing money means you’re purchasing assets, such as stocks, with the hope of increasing your future income. While investing can potentially mean you get a higher return than simply saving money, it also involves greater risks, such as when stocks go down. It’s a good idea to start investing when you have a decent amount of savings already and when you feel financially stable going forward.
6. Don’t stress!
It’s totally normal to feel overwhelmed about savings, especially at the beginning. If you’re working at your first job, saving money is new to you. You’re dealing with a lot of new information and adult responsibilities. While it’s important you start thinking about your future plans, don’t stress yourself out. Anxiety won’t solve anything, so take everything one step at a time. Don’t be afraid to ask your friends and loved ones for help, advice or support.